Payday lender PiggyBank has collapsed into administration following affordability complaints, compensation claims and a crackdown by the Financial Conduct Authority (FCA).
It is the latest loan company to fail in recent weeks, after the collapse of CashEuroNet and 247MoneyBox, and the demise of Wonga last year.
The Guardian reported that insolvency practitioner HJS has been appointed to carry out the administration of PiggyBank’s parent company, DJS, leaving about 45,000 customers facing financial uncertainty. PiggyBank was forced to stop trading in July after the FCA raised concerns about poor affordability checks.
It is not clear how much money customers who lodged compensation claims would receive after the company is wound down. PiggyBank offered loans of up to £1,000 to new customers for up to five months. Its customers would pay an interest rate equal to an annual percentage rate (APR) of between 1,255 per cent and 1,698 per cent. A large number of compensation claims have been made by customers who say they were mis-sold loans they could not afford.
The FCA took action in 2014 to cap fees and interest charges amid fears that payday customers were being trapped in a cycle of debt and loans were being rolled over so that it was increasingly difficult for customers to clear their debt.
Labour politician and payday loans campaigner Stella Creasy has also called for an investigation into the FCA’s regulation of Wonga and QuickQuid after the collapse of those two lenders.